Bank of America Raises Price Target On Intuitive Surgical

Bank of America raised its price target on Intuitive Surgical, Inc. ISRG Monday from $550 to $600 and maintained a Buy rating.

Analysts led by Bob Hopkins commented that “ISRG is up over 30 percent this year due in large part to reaccelerating procedure volume growth (PVG)” and that based on “our diligence and analysis...reacceleration is likely to continue in 2015.”

Hopkins had “less confidence regarding the outlook for system sales, but our survey work shows a much improved capital spending environment and our diligence suggest ISRG has been very creative in selling capital. Importantly, PVG remains the critical metric for ISRG value creation long term and we believe improving trends are likely to be well received.”

The $600 price target was “based on 29.5x our 2016 Cash EPS estimate (excluding amort, including stock option expense, and excluding the cash on ISRG's balance sheet). This is a meaningful premium to the medtech group on an absolute basis, but is reasonable, in our view, given an accelerating procedure growth profile and new product launches.”

Risks cited included “higher-than-expected deterioration in US gynecology procedures as a result of recent negative press, lower-than-expected uptake in general surgery -- particularly if ISRG's stapler is not as competitive as expected, and the potential for the macro environment or overall budget pressures from healthcare reform to cause a slowdown in system sales.”

Intuitive Surgical, Inc. recently traded at $531.73, down 0.04 percent.